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Jeff Bailey : 1/5/2008 2:45:05 AM

M, m, m ... good look'n put setup for INDU.

Jeff Bailey : 1/5/2008 2:36:31 AM

NYSE Comp ($NYA) Link


Russell 2000 ($RUT.X) Link

S&P 500 ($SPX) Link

S&P 100 ($OEX) Link

NASDAQ-100 ($NDX) Link

Dow Indus. ($INDU) Link

Jeff Bailey : 1/5/2008 2:24:58 AM

NYSE and NASDAQ Internals; SPX NH/NL data Table at this Link

The various major market bullish % give us the more institutional view of supply (O) and demand (X).

I developed this table to try and assist my shorter-term trading.

The NYSE A/D Day ratio (column L) is nearing some INFLECTION low measures (11/07/07; 11/19/07; 12/11/07; 12/17/07) while its trailing NYSE A/D 5-Day Ratio (column M) looks to have further room to decline to past inflection low measures (11/7/07; 11/21/07; 12/17/07). Tuesday's tend to be a day too look for INFLECTION highs and lows for "overbought" and "oversold" conditions.

The NYSE NH/NL data (columns N and O) have their RATIOS over to the right in column (AD, AE and AF).

At tonight's close, the BEARISH side of me observes that today's 561 NL is shy of a recent 11/20/07 (a Tuesday) NL reading of 614. Analysis here is one of two things. Perhaps both. Sellers are becoming "exhausted," or there simply too much "short covering" in the weaker stocks listed on the NYSE. One can go over to columns AE and AF and "smooth things out" to develop an flow. I've found the 10-day NH/NL ratios tend to move more in line with the BPSPX flows (combine some NASDAQ too).

The NASDAQ A/D Day ratio (column S) is at, or below recent INFLECTION low measures (11/07/07; 11/19/07; 12/03/07; 12/11/07; 12/17/07) while its trailing NASDAQ A/D 5-day Ratio (column T) nears INFLECTION low measures (11/07/07; 11/21/07; 12/05/07; 12/17/07).

The NASDAQ NH/NL data (columns U and V) have their RATIOS over to the right in column (AH, AJ and AK).

At tonight's close, the BEARISH side of me observes that today's 475 NL is slightly below a NL reading of 445 from 11/08/07 (a Thursday) and a 414 NL reading from 11/20/07 (a Tuesday). The BULLISH side of me observes the 12/21/07; 12/24/07 and 12/26/07 NH measures and understands that putting/shorting stocks at 52-week highs can be frustrating. The NASDAQ tends to be more "retail" oriented. That is, there are a lot of traders like you and I that "like the PERCEIVED action." You can tell from my MM Profiles trade blotter that I tend to trade more 1, 2 and 3-lettered stock symbols. Old habit I guess, but my days as a market maker knows some of the tricks of the trade.

Go over to columns AJ and AK to smooth things out. The BEARISH and BULLISH side of me certainly notes that tonight's 10-day NH/NL ratio still above the 12/24/07 measure of 26.7%. That has to be those NH of 135, 109, 134. Oracle (ORCL) Link and Apple (AAPL) Link comes to mind.

Way over to the right of the table, I also track the SPX NH/NL, but tracking this type of measure for 500 stocks is really pretty narrow. My data service provider has had issues the past two (2) days, so I don't have the data.

I also track the Russell 2000 (RUT.X) NH/NL figures, but haven't gotten updates the past two (2) days.

The Russell 2000 (RUT.X) plays an important role in my analysis of the U.S. economy. As mentioned over the years, it would be my opinion that the BULK of small cap companies are more DOMESTIC. That is, they tend to provide services or products to US-based consumer. Not as much EXPORT..

Jeff Bailey : 1/5/2008 12:19:54 AM

My end of year 2007 forecast was that the U.S. economy would experience a "modest recession" in 2008. Based on some of these bullish % readings, it would be my analysis at this point that market participants see recessionary indicators coming around April'08.

For my economic analysis to change, it would take PRICE action above SPX Link 1,529.99 followed with INTERNAL confirmation.

Jeff Bailey : 1/5/2008 12:12:51 AM

Major Market Bullish % from Dorsey/Wright that I keep track of at this Link

StockCharts.com's equivalent (may be off slightly as they adjust a stock's PnF and bar chart when dividends are paid).






BPINDU Link (rarely utilized as there are just 30 stocks and too narrow)

Jeff Bailey : 1/4/2008 10:16:38 PM

Closing U.S. Market Watch at this Link

RUT.X only major index to trade and close at new 52-week low.

SMH, DDX.X, BIX.X, BKX.X, RLX.X, RXH.X, XAL.X, TRAN and FVX.X close at new 52-week lows. TNX.X traded a new 52-week low, but closed above 3.840%.

OI Technical Staff : 1/4/2008 9:59:59 PM

The Market Monitor has been archived. You may view it and any previous days here: Link

Disclaimer: Stocks discussed in the Market Monitor are for educational purposes only and any analysis is not meant to imply a recommendation for or against that stock. The analysts in this forum as on any other website are prohibited by the SEC from giving any specific advice to ANY individual trader. All information posted is for ALL readers and is not meant to be directed to any individual. Our analysts cannot answer any email questions regarding any specific stock. Please do not ask and please do not take offense if requests are denied.

Results posted in the Market Monitor are hypothetical and OIN does not claim that any reader achieved these exact results. Due to the lag time between research, writing, posting, uploading, reading and execution there will be differences between the actual signal given and the fill achieved by the reader. Fills may be better or worse but in most cases they will be different. The writers will make every effort to give advance notice of intended signals and indicate potential price targets. Your individual results may vary depending on your activity level and aggressiveness. This forum is intended as an education service only. Trading involves risk and should not be attempted by anyone not ready to accept this risk. By acting on any signal in this forum you agree and personally accept this risk.

Jeff Bailey : 1/4/2008 5:52:27 PM

Current OPEN MM Profiles that I've made at this Link

Trade Blotter of CLOSED Trades for January and accurate OPTION Bid/Ask of OPEN Trades (see above) at this Link

Keene Little : 1/4/2008 4:11:40 PM

The COMP and RUT leave a bearish taste in my mouth (tastes like grubs) with the break below the November lows. By doing so it effectively negates the bullish possibility (left on the daily COMP chart but stating it's no longer possible). There are of course alternative price patterns such as a larger sideways consolidation but right now I'd be looking for bounces to short in the techs (and small caps), perhaps on Monday if we get one. Link

Keene Little : 1/4/2008 3:59:03 PM

The big cap techs, NDX, got crushed today, down -4.3%.

Keene Little : 1/4/2008 3:58:10 PM

The risk for the market here is a crash out of oversold conditions on Monday. Crashes don't come out of overbought conditions and by any measure the market is definitely oversold here. But betting on a crash is an even riskeir bet than betting on a bounce on Monday. It could be interesting.

Jeff Bailey : 1/4/2008 3:50:39 PM

Could hold over, but with RIO-MG, SWC-PB and QCB-NK's, will close out the PAL.

Jeff Bailey : 1/4/2008 3:48:19 PM

Day trade short cover alert the 1/2 position in North American Palladium (AMEX:PAL) at the offer of $3.96.

Keene Little : 1/4/2008 3:42:01 PM

So far the bears aren't afraid of holding over the weekend. The bounce off the low still looks corrective so we might not have seen the final lows yet. A close at the low is a real possibility at this point. So my scenario is playing out so far (except I said surprise rate cut tomorrow and of course meant Monday). On Monday they can send in the clowns, I mean Bernanke, with their surprise rate cut. I'm ready.

Keene Little : 1/4/2008 3:27:20 PM

SPX came within pennies of its Fib projection at 1411.92 for two equal legs down from Dec 11th (which is different from the 1410.93 projection on the daily chart since the Dec 18 lows are different on the daily vs. intraday charts): Link

The bulls want to see price recover back above the uptrend line from March 2003 before the close (or on it to keep both sides guessing). That level is near 1425. That trend line, which supported SPX in July and August, could tolerate a break of it for a day but not much longer than that and not much lower. The bulls need to step up to the plate now otherwise it could get ugly.

Jeff Bailey : 1/4/2008 3:21:17 PM

Excellent reporting from CNBC regarding 3:1 put buying on IWM.

My thoughts are that at 52-week low, institutional traders getting hit with a lot of stock. In order to HEDGE that stock, buying put protection.

See some of today's TRIN and VIX.X observations.

Jeff Bailey : 1/4/2008 3:15:07 PM

CBOE Most Active Call, Put Option Series at this Link

Linda Piazza : 1/4/2008 3:14:19 PM

I have to leave again and will be gone through the end of the day. If you've decided that you'll exit your bearish position by the end of the day, keep following the SPX or OEX lower with your stop, cinching it up tighter and tighter as the close approaches, so that you're taken out near the low of the day. The SPX orders have been harder than normal to get through the last few days, so don't wait until the last minute or two to place that order.

Keene Little : 1/4/2008 3:12:11 PM

I corrected a labeling error on the chart of my previous post.

Keene Little : 1/4/2008 3:11:30 PM

This DOW 60-min chart shows the potential support around 12800 (not to mention the century mark) with the uptrend line from August and then two internal Fib projections based on the move down from Dec 26th. This needs to hold for the bulls otherwise a drop to 12600 could be the next move. I still like the lottery play to buy some slightly OTM January call options. Buying support, as scary as today's drop is, is usually worth a try. Link

Jeff Bailey : 1/4/2008 3:11:14 PM

DJ-General Motors: Terminates $4.1B Standby Credit Pact. Has enough capital to meet needs.

Jeff Bailey : 1/4/2008 3:10:17 PM

General Motors (GM) $24.23 +1.29% ... finds a bid.

Linda Piazza : 1/4/2008 3:06:49 PM

The SPX's 15-minute 9-ema is now at 1418.43; the OEX's, at about 663.75. Both are being tested.

Soon it's going to be time to decide if you want to stay in a bearish trade over the weekend. Gaze for a few minutes at the chart linked to my 2:50:24 post as you're making that decision. Are you willing to risk that this long-term support will break and you'll get a continued downside move? It could happen, but what has worked in the past keeps working until it stops working, and that support has worked for more than four years now. That sounds simplistic and a bit stupid, but if you're holding over the weekend, you're going to need a strong move down Monday to make up the decay related to theta. A January 1420 put has a theta of -0.78, so it's going to lose $0.78 in value each day of the weekend.

Jeff Bailey : 1/4/2008 3:04:06 PM

Real could firm.

Jeff Bailey : 1/4/2008 3:03:45 PM

Brazil IOF Tax Decision Reversal (update)

DJ- Only hours after confirming it would levy its IOF financial operations tax at 0.38% on interbank foreign exchange operations, Brazil's government Friday retracted the measure following reports of a negative reaction in the currency market. In an official note, the ministry said the decree instituting the tax on a variety of financial transactions "would be corrected to exclude the incidence of the IOF on interbank exchange operations." According to reports from traders, liquidity in the currency market dropped significantly Friday following the confirmation of the proposed tax levy by the tax department earlier in the day. Alongside credit, insurance and overseas profit remittances, interbank forex operations were among financial operations targeted for tax increases by the government after Brazil's senate last month rejected the renewal of the country's CPMF financial transactions tax through 2011. The CPMF, which was charged at 0.38% on all financial transactions nationwide, including checks, collected approximately 40 billion Brazilian reals ($22.86 billion) in revenues annually for the government. In its place, Brazilian Finance Minister Guido Mantega Wednesday announced increases in the IOF and in the CSLL tax rate on corporate net profits in the financial sector to 15% from 9%. The minister said the tax increases would raise an additional BRL10 billion in revenues annually for the government. The tax hikes came alongside a simultaneous government pledge to cut BRL20 billion in spending from the 2008 budget. Mantega Wednesday said that in addition to the approximately BRL30 billion gained with the tax hike and spending reduction measures, the government expects to gain back the additional amount lost from the CPMF cancellation through increased revenues brought by economic growth.

Jeff Bailey : 1/4/2008 3:02:00 PM

Brazil Reverses Course, Annuls IOF Tax On Interbank Forex Ops

Linda Piazza : 1/4/2008 2:50:24 PM

An SPX weekly chart: Link

Jeff Bailey : 1/4/2008 2:45:46 PM

March Palladium (pa08h) $367.30 -3.25% ... slips back under its 61.8% retracement (11/07 high to recent 11/29 low)

Linda Piazza : 1/4/2008 2:44:53 PM

The SPX's 15-minute 9-ema is now at 1419.32; the OEX's, at 664.38.

Jeff Bailey : 1/4/2008 2:41:12 PM

TRIN 3.60 ...

Jeff Bailey : 1/4/2008 2:40:41 PM

SPY 141.24 ... at the low

Jeff Bailey : 1/4/2008 2:40:18 PM

VIX.X 24.00 ... afternoon high.

Keene Little : 1/4/2008 2:37:36 PM

DOW is now nearing potential in the 12800-12812 area.

Jeff Bailey : 1/4/2008 2:33:40 PM

Don't have an AMEX A/D, but NYSE usually does fine. NYSE A/D 702/2,447

Jeff Bailey : 1/4/2008 2:33:05 PM

PAL $3.95 x $3.96 ... looking for a bid pull to the close.

Jeff Bailey : 1/4/2008 2:32:43 PM

SWC $9.07 -8.10% ...

Keene Little : 1/4/2008 2:31:45 PM

In what looks like an ending pattern to the downside now (choppy decline with overlapping highs and lows since the mid-day high) it's fitting as an end to the leg down from December 26th. Ideally we'll see another choppy bounce to another lower high this afternoon and then a final low after that. If it's accompanied by some nice bullish divergences across multiple time frames then I'll be looking to buy it.

Since I don't want to be long futures over the weekend I'll pick up a couple of January calls as a lottery play for a rally into next week at a minimum. If the market crashes on Monday instead I'll at least know what my maximum loss will be.

Jane Fox : 1/4/2008 2:31:21 PM

Like I said earlier, when the AD Volume is heading down like this it speaks volumes and today it is speaking louder than the VIX. Link

Linda Piazza : 1/4/2008 2:29:41 PM

I'm going to switch to the 15-minute charts now. The SPX has been finding resistance on its 15-minute 9-ema on 15-minute closes over the last several hours. That's now at 1421. For the OEX, it's at 665.21. Bears want this pattern to continue . . . maybe. Even bears have to be getting a little worried at whether the bottom might just give out. None of us want our economy or our markets to be taken to the woodshed.

Jeff Bailey : 1/4/2008 2:25:31 PM

SPY darts to new session low ...

Jeff Bailey : 1/4/2008 2:24:16 PM

Day trade short alert! ... for 1/2 position in shares of North American Palladium (AMEX:PAL) at the bid of $3.96, LIMIT $3.95. Stop goes $4.05, target $3.75.

Jeff Bailey : 1/4/2008 2:18:22 PM

Yesterday's auto figures sure didn't leave me with the impression that catalytic converters were in great demand.

Jeff Bailey : 1/4/2008 2:17:21 PM

SWC WKLY S2 $9.07 with SWC $9.20.

Jeff Bailey : 1/4/2008 2:16:54 PM

PAL WKLY R2 $4.00. ... with PAL $3.96.

Jeff Bailey : 1/4/2008 2:16:11 PM

Check out PAL and SWC with your WEEKLY Pivot Levels turned on.

Jeff Bailey : 1/4/2008 2:12:28 PM

wouldn't you know it ... MO $75.59 +0.26% ...

Jeff Bailey : 1/4/2008 2:12:24 PM

TRIN's WKLY R2 right here!

Jeff Bailey : 1/4/2008 2:10:37 PM

TRIN 3.30 ... high of the day.

Jeff Bailey : 1/4/2008 2:04:14 PM

DJ- Base Metals: Copper Falls On Jobs Data, Profit-Taking

Keene Little : 1/4/2008 2:03:19 PM

OK, here's the scenario--we'll drop lower this afternoon and maybe even close near the lows (but not lower than SPX 1410). That will have all the bears slobbering all over themselves about a coming crash and high-fiving at the bar tonight. Then Bernanke will come in tomorrow before the open and surprise the market with a surprise rate cut to fricassee the bears (the Fed hates shorts and thinks they're a bunch of communists who hate America). He'll watch the market flame to the upside, toast his banker friends and mutter "life is good." You heard it here first (wink).

Jeff Bailey : 1/4/2008 2:02:27 PM

Dow Jones Global Indexes - Table of 12 Month High/Lows at this Link

Linda Piazza : 1/4/2008 2:01:02 PM

The SPX has important resistance today at a Keltner line that's now at 1426.09 on 15-minute closes; for the OEX, it's at 666.44.

Linda Piazza : 1/4/2008 1:59:08 PM

On the SPX and OEX, bullish price/RSI divergence showed up on the 15-minute chart on that last new low. That doesn't mean a thing other than that you need to have a plan for how you'll treat a countertrend bounce and then remain watchful for such a bounce. It does not mean it will occur.

Keene Little : 1/4/2008 1:57:01 PM

From today's mid-day high it's only a 3-wave move down and therefore it looks like the bottom may not be in yet. Be careful chasing bounces higher. Whether we drop lower from here or test the mid-day high first is the difficult part.

Linda Piazza : 1/4/2008 1:56:18 PM

The OEX will also soon move into a potential support zone on the daily chart. There's potential support from the rising trendline off the August low, of course, with that trendline now at about 664, if I'm eyeballing it correctly. An even longer-term trendline, a best-fit one off the 2006 low, also crosses at about that same level. The OEX is at 667.51 as I type. Bears need to have their profit-protecting plans in mind.

Jane Fox : 1/4/2008 1:46:29 PM

You know if we get any kind of rally I will be saying, "See I told you so." (smile)

Linda Piazza : 1/4/2008 1:45:09 PM

In addition to the other various forms of SPX support in that 1415-1419 potential support zone is the rising trendline off the August low, being hit as I type, with the SPX at 1418.46. Know where your stops should be if in bearish positions to protect your profit.

Jane Fox : 1/4/2008 1:41:43 PM

The Russell breaks the November AND August lows. Link

Linda Piazza : 1/4/2008 1:40:20 PM

The SPX is now falling deeper into the 1415-1419 potential support zone, so keep lowering your stops in case this drop, coming during a typical stop-running time of day, is quickly reversed. No signs of that yet.

Jane Fox : 1/4/2008 1:40:04 PM

And we head to new daily lows. Ah Gee!!

Jane Fox : 1/4/2008 1:38:07 PM

Until then just follow the charts.

Jane Fox : 1/4/2008 1:37:47 PM

The VIX is still telling me the bulls have the ball but price is certainly not agreeing and price action trumps all. I have a lot of faith in the VIX so I am going to stick to my guns and say we are going to see a very nice rally at SOME point today.

Keene Little : 1/4/2008 1:35:50 PM

The bounces still look corrective and I don't see anything bullish in the price pattern yet. A new low down to DOW 12800 still looks like a decent possibility. SPX is closer than the DOW to its November low near 1406 and if it drops below that level it would be a bearish heads up. The COMP and the RUT broke their November lows today but the COMP looks to be holding onto its uptrend line from July 2006, at least for now but it may be consolidating on support before breaking it.

Using the SPX daily chart, if price drops below 1406 I think there would be a good chance of seeing it head for some Fib projections near 1355, which would of course be a break below the August low near 1370. A break of the August low would negate the last possibility of a bullish wave count (the sideways 4th wave triangle since the July high, shown in light green). So at least we could be getting closer to some harder evidence as to what's next for the market. Link

Linda Piazza : 1/4/2008 1:25:52 PM

The TRAN is dropping back toward its low of the day. That previous low was 4276.33 and it's at 4278.10 as I type. The TRAN is sensitive to both crude costs and economic outlook, and it's been getting a double whammy this week.

Linda Piazza : 1/4/2008 1:23:06 PM

We're into the lunchtime lull, when anything can happen. Usually the SPX's 15-minute 9-ema flattens out during this period (it has) and sometimes the SPX travels across it toward the other side of its smallest channel during this period (hasn't yet). That opposite channel line on the 15-minute chart is now at about 1428.75.

This rise off the day's low, if you can call it that, continues to look bear flag like, but that doesn't mean that it will necessarily resolve to the downside. It's just not encouraging much confidence in any sustainability of this rise. As always, continue with sound account-management practices.

Jeff Bailey : 1/4/2008 1:22:01 PM

NASDAQ NH/NL Alert! ... Currently 45:420.

Today's 420 NL exceeding the 414 from 11/20/07.

Jane Fox : 1/4/2008 1:09:06 PM

VIX is heading back down to test daily lows and I think the markets will react and head up from here.

Linda Piazza : 1/4/2008 12:59:57 PM

I've been trying to figure out an appropriate time to switch back to the preferred (and easier to follow, for subscribers) 15-minute chart, but the SPX is still adhering more closely to the 7-minute. It's in breakdown mode on that chart, with strongest resistance now at 1428.20 on 7-minute closes. A close above that, if sustained, erases the breakdown status on that chart. The SPX is at 1423.61 as I type. If it doesn't rise fairly soon, that potential inverse H&S is going to be invalidated.

Jane Fox : 1/4/2008 12:51:00 PM

Vix made a new daily low but the S&P futures did not make a new daily high. I would not try anymore shorts until I see the VIX at least test daily highs. This is a very bullish divergence. Link

Keene Little : 1/4/2008 12:49:54 PM

In addition to the uptrend line from August, currently near DOW 12803, there are some Fib projections for the move down from Dec 26th lining up at 12808-12812 so watch for potential support if the DOW drops a little lower since it could make for a good long play from there.

Jane Fox : 1/4/2008 12:48:12 PM

TRIN is making new daily highs at 3.04.

Jeff Bailey : 1/4/2008 12:47:40 PM

DJ- ANALYSIS ... Aerospace Stocks Poised For More Gains ... Following a banner year in 2007, aerospace stocks should keep flying higher this year, fueled by a healthy increase in U.S. defense spending and the robust worldwide market for commercial aircraft, Ann Keeton writes.

Linda Piazza : 1/4/2008 1:01:06 PM

If you're in condors or bear call spreads for either January or February, today might be a good day to check the bear call portions and see if you can exit them for a small debit, retaining most of your credit. I've been out of all my Jan positions since before December's expiration, but I've just been able to exit 7 out of 20 Feb RUT 880/890 for $0.15. Not all people agree with doing this, but I'm all about containing risk these days. There's plenty of time for the RUT to rise up before February's expiration and for those to get into trouble. I originally collected $0.55 credit for those on 12/21, so I'm keeping 72 percent of my original credit for a trade that's endured only two weeks. I still have time to reenter if there's a big push upward in the next week or so.

I'm not getting any fills on my SPX Feb 1620/1630's, though. Just get in the habit of looking at these each day, thinking about the risk in your portfolio, and deciding if you want to take any offered opportunities to lower that risk.

Jeff Bailey : 1/4/2008 12:44:36 PM

US Oil Fund (USO) $77.06 -1.67% ...

Jeff Bailey : 1/4/2008 12:44:14 PM


DJ- The Movement for the Emancipation of the Niger Delta, or MEND, says in a statement sent by e-mail that its 'goal remains to paralyze 100% of Nigeria's oil exports in one swipe.'

Keene Little : 1/4/2008 12:44:13 PM

Bullish divergences continue as the market drops to either test this morning's low or make a new one. It's possible we're either putting in a tradeable bottom or else we'll chop sideways for the rest of the day.

Jeff Bailey : 1/4/2008 12:39:42 PM

10-year Treasury Yield ($TNX.X) down 5.3 bp at 3.848%.

Hovers right at recent 52-week lows (high for price). Did see trade at MONTHLY S1 38.24, or 3.824%.

Action here does have recent November lows for major indices in play if buying DEFENSIVE.

Jeff Bailey : 1/4/2008 12:36:04 PM

Sector Winners .. Utilities +0.94%, Biotech +0.10%

Jeff Bailey : 1/4/2008 12:32:08 PM


DJ- Shares fall 6% after Regions Financial says it will set aside four times as much money, about $360 million, to cover expected loan losses in the 4Q as it did in the 3Q, citing further weakening in portfolio of loans made to home builders.

RF $21.31 -8.46%

Linda Piazza : 1/4/2008 12:30:18 PM

The SPX is setting up a potential inverse H&S on its 7-minute chart. The USDJPY did something similar earlier today. It has since confirmed its formation and then rose. It hasn't quite yet met its upside target near 108.90 yet. It has, however, set up the possibility that the SPX could confirm its analogous formation. If the SPX is going to have any hope of doing so, the SPX shouldn't drop much further than 1423.40 or it will invalidate the thing. It's got to get above about 1429.20 on a 7-minute closing basis to confirm it.

Jeff Bailey : 1/4/2008 12:28:04 PM


DJ- Standard & Poor's Ratings Services places on watch for possible downgrade its ratings on 149 tranches worth a total of $6.42 billion from 43 U.S. cash flow and hybrid collateralized debt obligations.

Jeff Bailey : 1/4/2008 12:26:12 PM

For those of you new to options trading ... what I'm doing with the WB-PH and newly profiled WB-NZ.

The WB-PH gives us the RIGHT to SELL 100 shares of WB at $40.00.

Now we sell covered the WB-NZ, which has us OBLIGATED to BUY 100 shares at $32.50, minus the $1.00 premium received (from the selling), or $32.50 - $1.00= $31.50.

Jeff Bailey : 1/4/2008 12:19:13 PM

Apex Silver Mines (SIL) $15.98 +0.06% ... sticks its head green.

Jeff Bailey : 1/4/2008 12:17:16 PM

VIX.X 23.34 +3.77% ... WKLY R2 22.66. MONTHLY R1 25.48.

Jeff Bailey : 1/4/2008 12:16:30 PM

Swing trade sell covered put alert! ... for one (1) of the Wachovia Bank WB Feb $32.50 Puts (WB-NZ) at the bid of $1.00.

WB $35.94 -1.74% ...

Keene Little : 1/4/2008 12:14:30 PM

SPX is now 10 points off its low so it's a good bounce so far. I wish it looked more impulsive (it started as a 3-wave bounce which means it could be just a larger upward correction before heading lower again). If it's going to be just a larger 3-wave bounce then watch SPX 1429.36 which is where the bounce will have two equal legs up and a potential shorting opportunity for another leg down.

Jeff Bailey : 1/4/2008 12:11:55 PM

SMH's QUARTERLY Pivot at $34.20. Q S1 at $29.27.

Jeff Bailey : 1/4/2008 12:10:59 PM

Semiconductor HOLDRs (SMH) $29.72 -3.53% ... Only equity-based index/sector to trade MONTHLY S2 ($30.78) so far.

Jeff Bailey : 1/4/2008 12:09:55 PM


DJ- JPMorgan declares there's 'no more upside' for the chip maker, and cuts its rating to neutral from overweight, sending shares down 6%. Meanwhile, Intel drops out of a nonprofit project to sell low-cost laptops in the developing world.

INTC $23.02 -6.64% ...

Jeff Bailey : 1/4/2008 12:08:47 PM


DJ- Shares drop 7% after retailer's 3Q net falls 3% to $138.2 million, or 52c a share, while sales rise 11% to $1.79 billion. Company pegs full-year EPS between $2.08 and $2.11. Analysts were expecting $2.20 a share.

BBBY $25.56 -6.71% ...

Linda Piazza : 1/4/2008 12:08:37 PM

I'm back. I thought I was going to have to dash out of town and was dashing around here getting ready, but I'm here instead.

The SPX hit the top of that 1415-1419 potential support zone and then began bouncing. For the first time since yesterday morning, the SPX has begun closing 7-minute periods at or above its 9-ema on that chart, so there's a short-term change in tenor, but there's still a whole lot of work to do before we begin to feel all cozy about the state of the markets. The shape of the bounce is not a bullish shape but rather the type we sometimes see in bear flag climbs. So, we're in a period when we just don't know what's going to happen next. My only advice is to know where your stops are, stops set before the bounce, and honor them, and don't chastise yourself if you get out with a profit, but a lesser profit than you might have made if the SPX rolls down again.

Keene Little : 1/4/2008 12:02:34 PM

Linda and I have both been pointing out what the VIX has been up to during the past week. It bounced off support last week which of course coincided with the decline in the stock market. I then showed it breaking its downtrend line from November and mentioned it could pull back and find support on the broken downtrend line. Yesterday it pulled back to the line and today "rallied" higher: Link

But the new low in the stock market has not been met with a new high in the VIX. This is another bullish divergence for the stock market. So if you're short the market, pull your stop down closer. I'm watching to see what develops from the current small bounce off the low (another low or test of the low is possible) and will continue to keep an eye on the VIX.

Keene Little : 1/4/2008 11:41:51 AM

And Jane, the funny thing about rate cut expectations (that are supposedly bullish) is that SPX is about 50 points below where it was when the Fed started their rate-cutting campaign. I've said it before and I'll say it again--the Fed follows the market and is powerless to change the forces of the market. But you're right--we have to learn to play the reactions in the market even knowing it makes no sense sometimes. The "all-knowing" market is anything but. It's an "all-emotion" market instead.

Jeff Bailey : 1/4/2008 11:38:45 AM

Current OPEN MM Profiles that I've made at this Link

Option quotes may not be accurate.

Jane Fox : 1/4/2008 11:37:21 AM

Not to worry - these job numbers will have a strong upward revision next month (as will with any of the recent "weak"; economic data). This was to seal the deal on the next cut. Didn't the same thing happen last August?

Now we need to watch for a reversal based on the rumor of an emergency rate cut.

Ah I am hearing the voice of a skeptic here, (smile). It is hard not be isn't it but long ago I realized this is the game and if I want to play in this sandbox then I have to accept the rules, have enough intestinal fortitude to change them or get out of the sandbox. I certainly do not have the intestinal fortitude to change the rules and I want to continue to play so I have just accepted the rules and follow what the charts tell me.

Keene Little : 1/4/2008 11:29:44 AM

The downtrend lines for today's decline have now been broken and the bounce has broken the series of lower highs. A break above the bounce just past 10:30 should be the signal that a low is in. Then I'll be watching the form of the bounce for clues as to how much of a correction/rally we can expect. If it turns right back down from here then it will leave just a 3-wave bounce and head for new lows (or chop sideways in a larger correction).

Jeff Bailey : 1/4/2008 11:15:20 AM

Dynamic Materials (BOOM) $57.79 -4.24% ...

Jeff Bailey : 1/4/2008 11:14:52 AM

Dow Jones US Steel Index (DJUSST) Alert! 384.68 -4.05% ... breaks below 38.2% retracement of 8/16/07 relative low and recent high from 10/29/07

Keene Little : 1/4/2008 11:08:40 AM

The COMP is now approaching its uptrend line from July 2006 (through the August low so it's untested) near 2521.

Jeff Bailey : 1/4/2008 11:04:40 AM

"Bearish Triangle" ... Purdue University study revealed this pattern in BEAR phase market (depicted by bullish %) was profitable 87.5% of the time; average gain of 33.3%; Average time 2.5 months. It is the most powerful of the bearish PnF patterns.

Keene Little : 1/4/2008 11:02:48 AM

We should be into the last wave of the move down so any bounce that breaks this morning's pattern of lower highs should signal a bottom is in.

Linda Piazza : 1/4/2008 11:02:44 AM

I'm going to have to leave for the rest of the day. Bears, you have it easy now. Just pick a benchmark that fits your account-management style and follow prices lower with your stop on the other side of that benchmark. It can be a bounce of a certain number of points or a bounce above a descending moving average. Do be careful on the SPX as it approaches the 1415-1419 zone, as that's potential support. Do not do the coulda-woulda-shoulda thing if you practice sound account management procedures and are stopped out for a profit on a blimp up that is soon reversed. Better to do that than to let a bounce get too big and turn your profits into losses.

Jeff Bailey : 1/4/2008 11:02:24 AM

Dynamic Materials (BOOM) Alert! $57.85 -4.14% ... trade at $58.00 is "bearish triangle."

Jeff Bailey : 1/4/2008 11:00:40 AM

VXN.X 28.32

Jeff Bailey : 1/4/2008 11:00:32 AM

VIX.X 23.78

Jeff Bailey : 1/4/2008 10:58:49 AM

Swing trade put alert! ... for one (1) of the Dynamic Materials BOOM Feb $55 Puts (QCB-NK) at the offer of $3.00 ($2.70 x $3.00). No stop for now, target $53.00 in the underlying.

BOOM $58.37 -2.38% Link

Keene Little : 1/4/2008 10:55:12 AM

Market continues lower. DOW 12874 has also been broken now so a continuation lower could have the DOW heading for potential support at 12800 while SPX heads for its Fib projection near 1411 (two equal legs down from Dec 11th). The other thing I'm watching for is a potential throw-under below the bottom of the triangle patterns.

Linda Piazza : 1/4/2008 10:44:57 AM

I'm watching a tiny inverse H&S on the USDJPY's 5- and 7-minute charts, to see if it falls apart or confirms. It looks like a confirmation would require a 7-minute close above about 108.60; an invalidation, a drop much below 108.10. The USDJPY is now at 108.30.

Linda Piazza : 1/4/2008 10:42:55 AM

The TRAN's short-term pattern is congruent to the SPX's and OEX's. No divergences here.

Linda Piazza : 1/4/2008 10:41:25 AM

The SPX's 7-minute 9-ema is now at 1429.28; the OEX's 669.08.

Jeff Bailey : 1/4/2008 10:34:26 AM

MM Watch Listing alert! for those holdinig the WB-PH and SWC-PB long put trades ... I'm watch listing the WB-NZ for a possible covered put and the SWC-NU for a possible covered put.

Utilize what we've done with SPG and RIO in the past to try and profit in the future!

Might be helpful for other trades you hold in your account too.

Linda Piazza : 1/4/2008 10:30:51 AM

Since I'm noting that 7-minute closes have been at or below the SPX's 9-ema since early yesterday afternoon, I'm going to continue to follow the 7-minute chart so I can note the first slight change in tenor. Right now, the 9-ema has drifted down to 1431.65. On the OEX, it's just under 670.

Jane Fox : 1/4/2008 10:26:59 AM

WASHINGTON (MarketWatch) -- Growth in the nonmanufacturing side of the U.S. economy grew at a slightly slower pace in December, the Institute for Supply Management reported Friday. The ISM nonmanufacturing index fell to 53.9% in December from 54.1% in November. It's the lowest since March.

The reading was close to the 53.8% expected by economists.

Readings over 50% indicate most firms are expanding. The index has been over 50% for 57 straight months.

Just five of 18 industries were growing in December: retail, information, professional services, construction and health care. Eight industries were contracting, including management, accommodations, real estate and financials.

The new-orders index rose to 53.5% from 51.1%.

The employment index rose to 52.1% from 50.8%.

The prices-paid index fell to 72.7% from 76.5%

Keene Little : 1/4/2008 10:25:57 AM

Short term charts are showing some bullish divergences now and the 30 and 60-min charts are showing bullish divergence so far against Wednesday's lows (except for the RUT which has also broken down to a new 52-week low).

Jeff Bailey : 1/4/2008 10:22:57 AM

Decent volatility spike ... QQQ-MQ $0.82 x $0.83 ...

Linda Piazza : 1/4/2008 10:21:59 AM

The advdec line did not confirm its reversal signal in the last 15-minute period.

Jane Fox : 1/4/2008 10:21:12 AM

SPX is trading below the head and shoulders neckline and now the bears need a close below this neckline. Link

Linda Piazza : 1/4/2008 10:20:04 AM

The SPX's 7-minute 9-ema has now drifted down to just under 1434; the OEX's, 670.63. If the consolidation continues another few minutes, I'll be switching back to the 15-minute charts again.

Jane Fox : 1/4/2008 10:17:28 AM

Oh by the way the TRIN is 2.18, quite bearish.

Jeff Bailey : 1/4/2008 10:16:52 AM

Swing trade put target alert! for the QQQQ Jan $49 Puts (QQQ-MW) at the bid of $0.77.

As QQQQ traded $49.50.

Jane Fox : 1/4/2008 10:15:47 AM

Internals on the left all confirm that the bears have control but the "internals" on the right do not. The right hand side chart is the DAX and USDJPY markets so not official internals but they can be helpful when we need some confirmation. Today they are not confirming. Link

Linda Piazza : 1/4/2008 10:14:13 AM

The OEX's 7-minute 9-ema is now at 671.04.

Linda Piazza : 1/4/2008 10:13:43 AM

The SPX's 7-minute 9-ema has now dropped to 1434.50. Typically, there's a pop about now in the process up to (or down to, on rally days) to test the 9-ema, so don't be surprised if that happens soon. If you're in a bearish play, you want a 7-minute close beneath that average.

Jeff Bailey : 1/4/2008 10:12:20 AM

SPG $79.99 ... SPG-MQ $5.80 x $6.00.

Linda Piazza : 1/4/2008 10:10:40 AM

TRAN still going sideways at the bottom of its range. Watch the advdec line, though. It's got a potential reversal signal working on its 15-minute chart. Needs a big gain this 15-minute period to confirm it. Bears don't want to see a reversal, but if they do, they want it stopped at about -600. The advdec line is at -1714 as I type.

Keene Little : 1/4/2008 10:09:45 AM

SPX is within pennies of closing its gap from Nov 28th at 1428.23.

Linda Piazza : 1/4/2008 10:08:04 AM

Slight new low on the OEX and SPX. Keep trailing it lower with your stops if in bearish positions. Your danger is that we could get a big countertrend pop that stops you out before reversing lower again. Make sure that any such pop doesn't result in your profitable play turning into a loss, though. If you're stopped with a gain and don't participate in the rest of some hypothetical move, develop a philosophical attitude about it.

Jeff Bailey : 1/4/2008 10:06:15 AM

Dow Diamonds (DIA) Alert! $128.98 ... see 12/03/07 Wrap, 11/27/07 trade.

Jeff Bailey : 1/4/2008 10:05:27 AM

Swing trade put exit alert! for the SPG Jan $85 Puts (SPG-MQ) at the bid of $5.60.

SPG $80.41 -4.19% ... 80.9% MONTHLY Pivot Retracement.

Linda Piazza : 1/4/2008 10:04:53 AM

The OEX's 7-minute 9-ema is now at 671.49.

Linda Piazza : 1/4/2008 10:04:22 AM

SPX resistance on the 7-minute chart: 1433.51, 1435.05 and the 9-ema at 1436.47. SPX bears want to see the SPX expected countertrend bounce to stop somewhere in that zone. They then want to see a rollover to a new low. If you're in bearish positions, please do have a profit-protecting plan in mind.

Keene Little : 1/4/2008 10:00:55 AM

For SPX the trend line along the lows of the decline from Dec 26th crosses the uptrend line from March 2003 just under 1425 near noon today. If we get a little consolidation here followed by a new low down to that level with bullish divergences that's when I'd be looking for a buying opportunity (being careful about falling knives of course). Link

Linda Piazza : 1/4/2008 9:58:29 AM

Keltner outlook on the advdec line. The advdec line this morning dropped right to the lower outer Keltner line, now at -1790. The advdec line is consolidating there. U.S. equity bulls want it to bounce hard from this potential support. Bears want a rollover and a breakdown situation. If the advdec line does bounce, bears would prefer it not get above about -600 or so. Remember that these lines are dynamic and that since the numbers are big, a little movement in the advdec line can change those levels by a large amount.

Linda Piazza : 1/4/2008 9:55:51 AM

The USDJPY has now moved up a little from its earlier low. It's at 108.25 with strongest nearby resistance near 108.55.

Linda Piazza : 1/4/2008 9:54:51 AM

SPX consolidation at the low. I'm watching the 7-minute (chart I'm watching now) 9-ema speed down to catch up with the current SPX position, so I'm anticipating the possibility that the SPX at some point will jump up to test it when it gets close enough. It's at 1436.95 now and still dropping. First potential resistance now is at 1435.52 on 7-minute closes.

Jane Fox : 1/4/2008 9:50:44 AM

AD volume is below 0 and heading straight down. This is the kind of day when you need to take head of the AD volume because it speaks ... well volumes.

Linda Piazza : 1/4/2008 9:49:39 AM

The OEX is at first Keltner resistance on its 7-minute chart, at 670.51 on 7-minute closes.

Linda Piazza : 1/4/2008 9:48:25 AM

The movement has been fast today, so I'm drilling down on my intraday Keltner channels. I'm watching a 7-minute chart, which I know is difficult or impossible for many of you. However, for some reason, I've found in the past that it's a helpful interval upon which to watch the SPX and OEX. First nearby resistance on the SPX is near 1436, corroborating what we already knew.

Keene Little : 1/4/2008 9:48:11 AM

I've been talking about a potentially important turn date on Jan 10th but there's a short term Fib turn window Jan 3-5 which of course we're in right now. Will today mark a low? I see that as a good possibility when I look at the wave pattern, nearby support and this Fib turn window. Don't be a hero and try to buy a bottom but also don't get complacent if you're short and looking for more.

Jane Fox : 1/4/2008 9:47:02 AM

Remember ISM out at 10:00.

Linda Piazza : 1/4/2008 9:46:56 AM

A long-term price channel for the SPX now crosses at about 1412-1415. That is also a long-term price channel that's held throughout the rally that began in 2003, so you want that to hold on a weekly closing basis, too.

Jane Fox : 1/4/2008 9:44:48 AM

AD line is a bearish -1786.

Linda Piazza : 1/4/2008 9:37:51 AM

Another support level that's been in place for the SPX since 2003 is the weekly 72-ema. This average is now at 1439.58. Other than two one-week minor violations of that moving average, all weekly closes have been above this moving average since 2003's rally kicked off, so long-term equity bulls certainly don't want a close today much below that moving average.

Jeff Bailey : 1/4/2008 9:36:22 AM

Be alert out there ... we've got a couple of trades very close to target.

QQQQ $49.69 and SPG $81.53.

No complacency ... right?

Linda Piazza : 1/4/2008 9:33:56 AM

I've been showing a Keltner target near 1435 for the SPX on the three-day Keltner chart. Since 2003 this has been support on a three-day closing basis, although it's been pierced intra-period. Today is the first day of the current three-day period, so this could be pierced, but just know that this is a potential support level and bears should now have profit-protecting measures in place.

Linda Piazza : 1/4/2008 9:31:51 AM

The USDJPY dropped further after the jobs number, and now is at 108.04. However, it may be a race as to which economy shows the most weakness and the most resultant weakness in their economies, the U.S. or Japan. Remember that there are two components to the yen carry trade: the relative weakness of the yen in comparison to the U.S. dollar and euro and the hope that the securities bought with the yen that are borrowed will escalate faster than the carry charges for those borrowed yen. When equities are diving, this USDJPY intermarket relationship may not persist.

Keene Little : 1/4/2008 9:25:28 AM

Potential support for the DOW is 12874 (two equal legs down from Dec 11th) and then 12800 at the uptrend line from August (potential bottom of sideways triangle). This lower trend line could get an under-throw if this decline is the last wave (wave-e) within the triangle pattern that sets up the next rally. It takes a break below 12724 to say something more bearish is in progress. Link

Keene Little : 1/4/2008 9:18:25 AM

With the strong drop in the market this morning it would appear there is a good chance we'll see SPX tag potential support at its uptrend line from March 2003 near 1425.

Jane Fox : 1/4/2008 9:17:03 AM

If SPX closes below 1440 the head and shoulders confirms and there is a very good possibility this market would revisit the November lows and probably lower. Link

Jane Fox : 1/4/2008 9:09:21 AM

I thought the US$ support at 76 would hold but as you can see it did not. I feel like Patsy Cline and should start singing, "I was so wrong for so long." Link

Jane Fox : 1/4/2008 9:07:43 AM

Crude is not going to break $100/bl easily as this chart shows and may need to take another run at it. a pullback to 95/bl would be a gift and I think a very good place to get long or add to your long positions. Link

Jane Fox : 1/4/2008 9:05:20 AM

Gold has been very strong lately so needs to take a little rest and make some sort of retracement. Now the $64,000 question is where would a trader get back into Gold if he/she bailed on this market way too soon (wink). 800 would be a nice round number but markets are rarely so obvious so I think the 775 would be an even better spot. Link

Jane Fox : 1/4/2008 8:57:36 AM

Up until the employment report was released the markets were doing OK but as you can see they didn't like the data out at 8:30. Some news sources were trying to wrap this report in a nice little bow saying this gives the FED another reason to lower interest rates but anyway you look at it this was not good news. Link

Jane Fox : 1/4/2008 8:50:12 AM

Dateline WSJ - WASHINGTON -- U.S. employment posted its smallest increase in over four years last month as the housing downturn continued to take its toll last month, while the jobless rate hit a two-year high, indicating a weak finish for the U.S. economy in 2007. from relatively tight labor markets.

The poor employment report should clear the way for a fourth-straight rate cut by the Federal Reserve later this month, as concerns mount about continuing troubles in credit markets. from relatively tight labor markets.

Nonfarm payrolls rose 18,000 in December, the job market's worst performance since a decline of 42,000 in August 2003, the Labor Department said Friday. That was down from November's 115,000 gain, which was revised up from an initial estimate of a 94,000 increase. from relatively tight labor markets.

The unemployment rate rose to 5.0%, the highest level since November 2005, from 4.7% the previous month. Economists in the Dow Jones Newswires survey had expected a 4.8% unemployment rate. from relatively tight labor markets.

Average hourly earnings increased $0.07, or 0.4%, to $17.71. That was up 4.3% from a year earlier, indicating some pressure on wage costs from relatively tight labor markets.

December payrolls came up short of Wall Street expectations for a 50,000 rise.

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